Bankrupting America’s Spending Daily

Spending Daily | January 9, 2013

Debt Wish: The DenialBankrupting America, a project of Public Notice, writes, “The first step to fixing a problem is admitting you have one. Our deficit is on pace to top $1 trillion for the fifth straight year. Washington hasn’t produced a budget in more than a thousand days. We’re about to blow through another debt ceiling. Yet, according to our current administration, ‘We don’t have a spending problem.’ ‘We’re $16.4 trillion in debt, heading towards our fifth straight year of trillion dollar deficits, and President Obama doesn’t think we have a spending problem?’ said Public Notice Executive Director Gretchen Hamel. ‘Passing emergency legislation on New Year’s Day to avert a major economic crisis is a problem. Credit rating agencies threatening to downgrade our economy if we don’t address our debt is a problem. President Obama recognized spending was a problem before he took office, and now he needs to take responsibility for making it worse.'” Click here to read more.

“Obama’s Budget Running Late”Roll Call reports, “The Obama administration’s fiscal 2014 budget is widely expected to arrive late on Capitol Hill, possibly not until sometime in March, primarily as a result of uncertainty created by fiscal cliff negotiations. The White House and Office of Management and Budget have not said when the budget will be released. By law, the spending proposal is due the first Monday in February, which will be Feb. 4. Fiscal 2014 will begin Oct. 1. … A Pentagon official said that as of the end of last week, departments and agencies had not yet been told by the White House how much money they will have to work with in their fiscal 2014 budgets, a process known as ‘passback.’ That information is usually conveyed in late November, after the administration has reviewed the agencies’ budget requests.”

CBO: $293 Billion U.S. Deficit in First QuarterThe Hill reports, “The federal government ran up a $293 billion deficit in the first quarter of fiscal 2013, which ended Dec. 31, the nonpartisan Congressional Budget Office estimated Tuesday. … At this pace, the deficit would be on pace to top $1 trillion for the fifth-straight year in 2013. All the trillion-dollar deficits have taken place under President Obama. By the White House’s own estimate, the New Year’s Eve tax deal with Congress will only reduce the deficit by $4 billion this year, once increased spending such as on unemployment benefits is taken into account. The first-quarter shortfall was $29 billion less than in the first three months of fiscal 2012, CBO said.”

AIG Suing Government Over Its Own Bailout?Reuters reports, “American International Group Inc, the insurer rescued by the U.S. government in 2008, said on Tuesday it is considering joining a lawsuit that claims the bailout terms were unfair, drawing angry condemnation from lawmakers. A leading congressional Democrat called criticism of the deal’s terms ‘utterly ridiculous,’ and former New York Attorney General Eliot Spitzer – who probed AIG when he was in office – called the prospect of a lawsuit ‘insulting to the public.’ … In a statement late Tuesday, AIG said it had no choice but to consider the demand from its former chief executive, Hank Greenberg, and his holding company Starr International that AIG join his lawsuit. Greenberg has sued for damages over the bailout and wants AIG to join him in challenging the ‘exorbitant’ terms of the government rescue.”

McConnell In The Driver’s Seat On Entitlement TalksThe Hill reports, “Senate Republican Leader Mitch McConnell is poised to play a bigger role in negotiations to reform entitlement programs in the wake of the tax deal he helped forge last week. Lawmakers see the passage of a bill to extend most of the Bush-era income tax rates and settle the question of estate, capital gains and dividend tax rates as a template for how to move the next installment of deficit reduction. That would mean moving bipartisan legislation first in the Senate and put McConnell, the senior senator from Kentucky, in the driver’s seat. … McConnell has had a cool relationship with Obama and marveled at times that the president has not done more to engage with him. His relationship with Biden, who served 36 years in the Senate, has been warmer. McConnell conducted secret talks with Biden after the 2010 election to set up a deal to extend almost all of the Bush-era tax cuts for two years and unemployment insurance for 13 months. “

“Cliff Deal Forces IRS to Delay Tax Filing”
According to The Wall Street Journal, “Millions of U.S. taxpayers will get delayed refunds this year because Congress went down to the wire in passing a fiscal-cliff bill. The Internal Revenue Service said Tuesday that it would delay the start of its 2013 tax-filing season for most filers until Jan. 30, about a week later than previously scheduled. This means several million taxpayers who would have filed sooner—many of them lower-income—will likely face at least a brief delay in their refunds. Lower-income households often depend on these refunds for basic living expenses such as food, rent, prescriptions and car payments, said Michele LaForest Halloran, director of the tax clinic at Michigan State University law school. … The delay could help the federal government a bit, however, by postponing the day when it runs out of cash to pay all its bills.”

Businesses Fear Debt Ceiling Deal Will Include Tax HikeThe Hill reports, “Business groups in Washington are worried that a deal to increase the debt ceiling will also raise taxes. While industry groups are aligned with Obama on the need to lift the debt limit, there’s a growing fear that new tax revenue will be considered as lawmakers look to build upon thedeficit cuts in the ‘fiscal cliff’ agreement. ‘Our first thought is it’s better for business that the debt ceiling gets raised,’ said Jay Perron, vice president of government affairs and public policy for the International Franchise Association. ‘We are afraid that in some sort of overall deal that they may find a way to raise tax rates again. We want to make sure that they are done with tax increases.’”

Americans Crippled By Economy Head To ‘Greener Pastures’The Wall Street Journal reports, “Americans began striking out for greener pastures at a pace not seen since before the recession crippled job prospects, hobbled home sales and kept many stuck in place. About 3.9% of the population, or 11.8 million people, moved to a different county in 2011, new Census figures show. That was the highest level since before the recession, and up from 3.5% in 2010 and 2009—the lowest level since the government began the tally in 1948.” Read More…

What Happens with No Debt Ceiling Extension?
Stephen Moore writes in The Wall Street Journal, “House and Senate Republicans are still huddling to plot the best strategy as they approach the next financial cliff in Washington: the debt ceiling. President Obama will need a hike in the federal debt level, now $16.4 trillion, by March. The federal government already is technically exceeding that debt cap, but the Treasury Department is using accounting gimmicks and raiding trust funds to get around the ceiling for at least the next several weeks. … Republicans are looking into what would happen procedurally if a debt ceiling deal isn’t reached in time. It appears that the Constitution prevents a default. Even though the government would be legally prohibited from continuing to borrow, the revenues that come into the government each week would be first spent on making debt payments. So default is a bogeyman. Still, failure to enact a debt ceiling extension would mean a partial government shutdown.”

Fed’s Lacker Warns Of Inflation Risk The New York Times reports, “Jeffrey M. Lacker, the Federal Reserve’s most persistent internal critic, does not much resemble a firebrand. He is personally cheerful, professionally inclined to see both sides of an issue and quick to acknowledge he may not be right. He says he would rather be wrong. But for the last several years, Mr. Lacker, president of the Federal Reserve Bank of Richmond, has warned repeatedly that the central bank’s extraordinary efforts to stimulate growth are ineffective and inappropriate and, worst ofall, that the Fed is undermining its hard-won ability to control inflation. … ‘We’re at the limits of our understanding of how monetary policy affects the economy,’ Mr. Lacker said in a recent interview in his office atop the bank’s skyscraper here. ‘Sometimes when you test the limits you find out where the limits are by breaking through and going too far.’”

BankruptingAmerica.org is an educational project of Public Notice, an independent, nonpartisan, non-profit, 501(c)(4) organization dedicated to providing facts and insight on the effects public policy has on Americans’ financial well-being

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